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Blockchain allows parties to coordinate complex transactions without a central intermediary and unnecessary data reconciliation processes.
The blockchain technology that was created to trade bitcoin is no longer associated exclusively with cryptocurrency. It penetrates deeper and deeper into almost every industry. The most popular blockchain sector is financial. Major global banks are investing in startups based on Blockchain technology or partnering with tech companies that use this technology. Its attractiveness to the market is due to a number of factors, including:
How world banks are using blockchain
Blockchain is a record of a series of transactions in a publicly available decentralized virtual database. Literally translated, a blockchain is a continuous chain of blocks. Photo: cloudmakers.ru
Both private and central banks around the world are trying to explore the possibilities of innovative technology. For example, banks in India are teaming up to use blockchain technology to solve a service problem - processing letters of credit, GST invoices and e-invoices. And Deutsche Bank is testing a corporate bond platform that uses smart contracts to issue and redeem debt instruments. Meanwhile, one of the leading US banking institutions, Goldman Sachs is among the top investors supporting the USDC (stablecoin) stablecoin pegged to the US dollar. Its use allows the company to safely move large amounts of money around the world without worrying about the volatility of cryptocurrencies. Also Goldman Sachs has joined JPMorgan's blockchain operating infrastructure to execute smart-contract REPO transactions using the digital version of the dollar.
On April 12 this year, JP Morgan, the largest US bank holding company, announced that it is using blockchain technology to improve money transfers. The new solution allows the company to reduce the time it takes to process and verify payments. Using Confirm, JPMorgan's global blockchain account information validation program, partner banking institutions can request confirmation of beneficiary account information and receive real-time responses from other participating banks. Once verified, the payment can be sent using JPMorgan's global clearing solution.
Also, more than 380 banks already use the Liink JP Morgan platform for data exchange. Liink is a blockchain application using the Onyx blockchain platform. It enables financial institutions and corporate users to perform secure peer-to-peer data transfers with greater speed and reliability. The biggest advantage of using Liink is the integration of the tool into any platform through an open API.
The UK's largest bank HSBC is using a blockchain platform for its service to securely store digital assets and reduce costs. Corda blockchain technology provides HSBC with the ability to transfer most of the transaction lifecycle to the ledger. Bank of America, together with Paxos Trust Co. use blockchain to perform stock trading in minutes. Also, the modernized blockchain-based system allowed American Signature Bank customers to send dollar payments in real time without transaction fees.
This year, Singapore-based DBS bank made the first ever blockchain-based security token offering. Asset tokenization is used by DBS Digital Exchange to deal with valuable assets. The bank also founded a crypto trust, which offers investment management services with a large number of different cryptocurrencies.
Meanwhile, Sweden's central bank is experimenting with issuing its own digital currency, the e-krona. The project uses the Corda distributed ledger technology solution. And the Bank of England is actively exploring the blockchain version of the British pound sterling. The interest in innovation stems from the fact that digital currencies can help central banks counter the power and influence of payment system monopolies.
The blockchain technology that was created to trade bitcoin is no longer associated exclusively with cryptocurrency. It penetrates deeper and deeper into almost every industry. The most popular blockchain sector is financial. Major global banks are investing in startups based on Blockchain technology or partnering with tech companies that use this technology. Its attractiveness to the market is due to a number of factors, including:
- savings and cost efficiency. Banks worried about rising costs of maintaining or replacing their aging infrastructure and complying with high regulatory requirements are turning their attention to blockchain. It opens up opportunities for them to carry out direct transactions with each other and reduce the overall cost of settlements;
- competition with fintech startups. Fintech, thanks to the blockchain, is able to offer services (money transfers and international payments) at lower costs, higher speed and using simple interfaces. To compete with these startups, banks have started building their own blockchain-based solutions.
How world banks are using blockchain
Blockchain is a record of a series of transactions in a publicly available decentralized virtual database. Literally translated, a blockchain is a continuous chain of blocks. Photo: cloudmakers.ru
Both private and central banks around the world are trying to explore the possibilities of innovative technology. For example, banks in India are teaming up to use blockchain technology to solve a service problem - processing letters of credit, GST invoices and e-invoices. And Deutsche Bank is testing a corporate bond platform that uses smart contracts to issue and redeem debt instruments. Meanwhile, one of the leading US banking institutions, Goldman Sachs is among the top investors supporting the USDC (stablecoin) stablecoin pegged to the US dollar. Its use allows the company to safely move large amounts of money around the world without worrying about the volatility of cryptocurrencies. Also Goldman Sachs has joined JPMorgan's blockchain operating infrastructure to execute smart-contract REPO transactions using the digital version of the dollar.
On April 12 this year, JP Morgan, the largest US bank holding company, announced that it is using blockchain technology to improve money transfers. The new solution allows the company to reduce the time it takes to process and verify payments. Using Confirm, JPMorgan's global blockchain account information validation program, partner banking institutions can request confirmation of beneficiary account information and receive real-time responses from other participating banks. Once verified, the payment can be sent using JPMorgan's global clearing solution.
Also, more than 380 banks already use the Liink JP Morgan platform for data exchange. Liink is a blockchain application using the Onyx blockchain platform. It enables financial institutions and corporate users to perform secure peer-to-peer data transfers with greater speed and reliability. The biggest advantage of using Liink is the integration of the tool into any platform through an open API.
The UK's largest bank HSBC is using a blockchain platform for its service to securely store digital assets and reduce costs. Corda blockchain technology provides HSBC with the ability to transfer most of the transaction lifecycle to the ledger. Bank of America, together with Paxos Trust Co. use blockchain to perform stock trading in minutes. Also, the modernized blockchain-based system allowed American Signature Bank customers to send dollar payments in real time without transaction fees.
This year, Singapore-based DBS bank made the first ever blockchain-based security token offering. Asset tokenization is used by DBS Digital Exchange to deal with valuable assets. The bank also founded a crypto trust, which offers investment management services with a large number of different cryptocurrencies.
Meanwhile, Sweden's central bank is experimenting with issuing its own digital currency, the e-krona. The project uses the Corda distributed ledger technology solution. And the Bank of England is actively exploring the blockchain version of the British pound sterling. The interest in innovation stems from the fact that digital currencies can help central banks counter the power and influence of payment system monopolies.
